[opendtv] Re: Incrementalism
- From: Craig Birkmaier <craig@xxxxxxxxxxxxx>
- To: "opendtv@xxxxxxxxxxxxx" <opendtv@xxxxxxxxxxxxx>
- Date: Sat, 11 Jan 2014 10:33:36 -0500
> On Jan 10, 2014, at 6:08 PM, "Manfredi, Albert E"
> <albert.e.manfredi@xxxxxxxxxx> wrote:
>
> Craig Birkmaier wrote:
>
> Developed countries already have plenty of broadband deployed to homes. Does
> anyone doubt that US TV networks could, say, double their viewership, if they
> made their US shows, unaltered, available over the Internet (ad supported
> primarily)?
I do.
Developed countries also have well developed TV distribution infrastructures
that already carry all of the U.S. Network programs that have ratings appeal
outside the U.S.
If there is an audience for these shows it is already being addressed. It is
absurd to contend that the size of this audience can be doubled with Internet
distribution.
What "could" be inferred is that many people would view Internet streams from
the U.S. In order to see these programs sooner than they can today. This is
much like the WSJ article illustrating that there are some consumers willing to
pay a premium to buy a Digital HD download before a movie is released into the
sale/rental market on shiny discs.
But this just shifts when the networks would realize revenues for those foreign
markets, and requires the networks to sell those eyeballs to advertisers.
Bottom line, the networks get to make this decision. It is unlikely they would
devalue an asset they want to sell to an international broadcaster who has
broad reach in another country, to skim a few bucks via early Internet release.
>> Of the 2 billion with Internet access, only 600 million had broadband in
>> 2012;
>
> Only 600 million. Wow, that's really bad. How does that compare with the
> entire US market for TV shows, Craig?
Well of those 600 million, nearly 90 million are in the U.S., which has about
125 million TV Households. So in theory, the U.S. Networks could access about
500 million homes outside the U.S.; but they could not access the other 6.5
billion who still rely on international broadcasters or international DVD sales
to view content from the U.S.
>> This is just plain wrong.
>>
>> Digital HD download is a NEW window BEFORE release on shiny discs and to
>> premium movie services.
>
> At first, the Internet was too slow for streaming. So Netflix set up this DVD
> rental scheme
Don't change the subject Bert. DigitalHD downloads are sales, not stream
rentals.
And Netflix did not create the DVD rental market; they just tweeked it a bit by
using the U.S. Mail to distribute discs rather than driving to The local
Blockbuster store. Now Redbox has replaced the store with automated kiosks.
> .Then, the Internet gets fast enough for SD streaming. So Netflix goes into a
> big effort to get as many titles set up for streaming as they can. And they
> also go to the trouble of trying to distance the Netflix name from DVDs
> altogether, even. The DVD rental model was just a transitional model, Craig.
> It's clearly not the best way to do this movie rental business.
No argument that streaming is better...if you can get what you want.
Netflix does not control when you can see a movie - the studios do. The studios
determine when a DVD is released; at that point in time Netflix can buy the
discs and rent them. The studios determine when they will license a movie to
Netflix, Apple, Amazon et al for Internet streaming.
As noted before, these are all well orchestrated release windows, designed to
maximize revenues for the studios.
> But for HD content, the Internet is still not ready for direct streaming.
Really? I stream HD content frequently. HD movies and TV shows are typically
delivered at between 3 - 5 Mbps. HD sports may use up to 7 Mbps. Remember, most
Internet streaming is encoded using h.264, not MPEG 2. And quality oriented
services like iTunes take great care to encode assets with no apparent
compression artifacts.
> And sure, whatever rights for that as well. So Netflix allows downloads to
> some proprietary box that they know their customers would just as soon do
> without. (And they also distribute BluRay, but that business is on the
> decline.)
Actually Blu-Ray just had its best sales month ever. But that's not saying much
as it has always been a niche market.
"Whatever rights" is the operative phrase here Bert. The congloms maximize
revenues by carefully managing rights and release windows.
Netflix just had a huge year. But the analysts are rightly concerned about the
future as the company is operating at a loss on razor thin margins.
http://www.fool.com/investing/general/2013/10/20/the-secret-to-netflixs-future.aspx
This analysis points out that operating expenses are growing faster than
revenues as Nextflix scales up to serve millions of new streaming subscribers.
It does not even address licensing costs; if the congloms wanted to kill
Netflix they could simply raise licensing fees, instead they are playing along,
increasing license fees just enough to keep Netflix alive.
> The next step is HD streaming. Since many households these days have 15 to
> 20+ Mb/s broadband connections, at least that last mile aspect may already be
> in place, in many locations.
I now have 20 Mbps downstream; 7 Mbps broadband is only slightly less
expensive. It is important to note that the cable companies have a huge
advantage here both with respect to download speeds, AND the fact that they
bundle broadband and digital cable at more attractive rates. AT&T now offers
Uverse DSL in some areas of Gainesville at speeds of up to 18 Mbps, but the
best they could offer me was 6 Mbps, and I'm close to the CO.
> Discs are on the way out, Craig. That's just a side show. Discs are on the
> decline, streaming is on the rise. The disc market will be a niche. So what?
What makes you think I'm defending shiny discs? I wrote about their coming
demise more than a decade ago, correctly asserting that HD on shiny discs would
be a niche market.
No one is arguing about the fact that selling and renting content via the
Internet is a growing business. The argument here is that you believe the
congloms can make more money without all of the middlemen they use today.
Regards
Craig
> Bert
>
>
>
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